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The newspaper, citing an internal government report, adds that the accord would allow “surveillance only for previously agreed purposes such as combating terrorism and the proliferation of weapons of mass destruction.”

It would also bar a member state’s intelligence service from asking a sister service to obtain data on its citizens if this not allowed under the querants’ national law.

A separate but similar deal between the US and Germany is also said to be on the verge of collapse.

The debate comes after former US intelligence contractor Edward Snowden revealed that the US intelligence agency, the NSA, and its UK equivalent, GCHQ, are collecting and bulk processing people’s personal data on a global scale.

The tools used by the agencies are said to violate privacy rights and to conduct political and industrial espionage on a scale never before seen.

The Snowden leaks also show that intelligence services in France, Germany, the Netherlands and Sweden have co-operated with the US and UK-led snooping operation.

EU leaders were silent on the revelations until it came out that the US has even bugged German Chancellor Angela Merkel’s mobile phone and that the US embassy in Berlin has a listening station on its roof.

“I’m deeply upset, not only because I have received no explanation or regret, but also because I believe as a democrat that these activities should be illegal,” he told press on Wednesday, the Financial Times reports.

The Americans are currently lobbying the EU institutions and member states in an effort to restore trust, with President Barack Obama set to deliver a speech on NSA reforms.

But for their part, some MEPs have called on the European Commission to scrap EU data exchange agreements with the US.

Deputies in Strasbourg on Wednesday re-iterated their demand for the commission to suspend the EU-US Safe Harbour deal, which is designed to ensure that firms follow EU data protection laws when processing the personal data of EU citizens.

They said the NSA revelations prove that US companies do not comply with the deal.

“We will not tolerate Americans and Europeans are divided into first and second class citizens as regards their data protection,” Germany’s Manfred Weber, the centre-right EPP group’s vice-president, noted.